Oil rose to its highest price in 27 months on speculation the U.S. will sustain an economic recovery into this year, bolstering consumption in the world’s largest crude user. Futures gained as much as 0.9 percent before today’s publication of the Institute for Supply Management’s factory index, which may show that manufacturing in the U.S. grew at the fastest pace in seven months in December. Fuel demand in the country climbed to the highest since May 2008 in the week ended Dec. 24, Energy Department figures published last week showed. The ISM report may “further fuel market optimism about higher economic growth and oil demand in the United States,” said Carsten Fritsch, an analyst with Commerzbank AG in Frankfurt. “The ISM index is considered a good leading indicator for the entire economy.” Crude for February delivery rose as much as 85 cents on the New York Mercantile Exchange to $92.23 a barrel, the highest price since Oct. 7, 2008. The contract traded at $92.19 a barrel at 1:01 p.m. London time. Brent crude for February settlement rose as much as $1.32, or 1.4 percent, to $96.07 a barrel on the London-based ICE Futures Europe exchange. That’s the highest since Oct. 2, 2008. The ISM index rose to 57 in December from 56.6 the prior month, according to the median estimate of 57 economists surveyed by Bloomberg News. The Tempe, Arizona-based ISM’s report is due at 10 a.m. New York time. Estimates in the Bloomberg survey ranged from 55 to 60. $100 ‘Very Likely’ Oil prices will average $93 a barrel this year and are “very likely” to climb above $100, said Jason Schenker, president of Prestige Economics in Austin, Texas, in a Bloomberg television interview. The Organization of Petroleum Exporting Countries, which controls about 40 percent of world oil supplies, maintained a production target of 24.845 million barrels at a meeting in Ecuador last month, a target in effect since December 2008. The group is likely to hold an extraordinary meeting before its next scheduled gathering in June, Schenker said. “They are going to raise their quota this year,” Schenker said. “There is no question.” Oil advanced 15 percent last year, building on a 78 percent rally in 2009, as signs the global economic recovery is gaining momentum stoked demand for raw materials. Commodities beat increases in equities, bonds and the dollar as China led a recovery from the deepest recession since World War II. Crude may fall this week, a Bloomberg News survey showed. Eighteen of 31 analysts and traders, or 58 percent, forecast prices will decline through Jan. 7. Ten respondents, or 32 percent, predicted futures will rise, and three estimated there will be little change. U.S. oil stockpiles decreased for four weeks in December, the longest drop in a year, according to the Energy Department. Supplies, at 339.4 million barrels, were 7.2 percent above the five-year average. Total products supplied, a measure of demand, gained 3.1 percent in the seven days ended Dec. 24 to 20.7 million barrels a day, the highest level since May 2008, according to the Energy Department. To contact the reporter on this story: Robert Tuttle in Doha at rtuttle@bloomberg.net To contact the editor responsible for this story: Stephen Voss on sev@bloomberg.net

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